Monday, June 19, 2006

Acute observers may have noticed that I removed "Crooks and Liars" from my list of links on the right. I did this a couple of weeks ago because I do not believe that the managers of this site have any real interest in promoting honesty over dishonesty. Their interest is in promoting liberalism over conservatism, and that is not the same thing.

For example, the site recently posted an exchange between Dave Sirota and John Stossel on the issue of the minimum wage. The transcript of that debate contained the following exchange:

Mr. SIROTA: Well, listen, John, I would encourage you stop reciting these dishonest talking points and the chatter you're hearing on the cocktail party circuit because the stats don't bear that out in any way at all. And here are the stats that you cannot dispute. In states that have raised the minimum wage, above the federal level, those states have created jobs at a far faster rate than the states that have not. That is because, when you raise the minimum wage, you put money into the pockets of people who will spend it and it spurs the economy. Now, that might not be heard in your book which purports to debunk lies, but those are the facts.

Mr. STOSSEL: Well, if those are the facts, why stop at $7. We should pay everybody 20 bucks, 40 bucks an hour. Then we'll really have buying power. It's just...

In addressing this exchange, Crooks and Liars decided to highlight and cheer Sirota’s name-calling an insults, saying nothing about the quality of the arguments that Sirota used.

Those arguments were not very good.

On the charge of “changing the subject” that Sirota made in the exchange quoted above, Sirota was simply wrong. Stossel gave a perfectly valid response to Sirota’s claim.

Sirota began by providing a statistical correlation between higher minimum wage and higher job creation.

On this, I want to take a brief look at his statistical claim, before moving on to a more important criticism of Sirota’s statement.

The Quality of the Statistics

First, I followed the links back to see if Sirota provides any support for these stats that he says are beyond dispute. The chain of links carries me through Sirota’s self-congratulations over his insult and ad-hominem in a public form. Then, back to a posting where he discusses the exchange itself. Here, where he claims that Stossel lied, he provides a link as if to support his thesis, but he is only quoting himself.

Eventually, we get a reference to “a comprehensive 2004 study” from “the nonpartisan Fiscal Policy Institute.” I went through the publications of the Fiscal Policy Institute on the Minimum Wage looking for references to articles from peer-reviewed economics journals. A substantial portion of the Fiscal Policy Institute’s references were to their own publications. Elsewhere, the only peer-reviewed articles they referred to were the results of David Card and Alan B. Kruger. In other words, in an industry where the consensus opinion is that a higher minimum wage does harm, and a few skeptics publish a dissenting view,the Fiscal Policy Institute tell us to go with the skeptics.

This is actually similar to the tactics what global-warming skeptics use against the global warming hypothesis. They look to institutes with academic-sounding names to find a few dissenting publications in the professional literature that they can use to discredit the consensus view held by a majority of professionals in the field. This is in spite of the fact that a majority of professionals are well aware of the claims being made by these skeptics and do not think that they have merit. If Card and Krueger were not able to convince economists generally, then why should we allow them to convince us?

This has all of the appearance to me of people cherry-picking data to get the conclusion that they want, the same way that President Bush cherry-picked data to support the invasion of Iraq. It is a mark of intellectual irresponsibility that has proved itself to have very costly effects.

The Quality of the Reasoning

However, my main complaint against Crooks and Liars is not that they supported Sirota in spite of making claims with little peer-reviewed academic support. My objection is that they supported Sirota and even cheered him in spite of the use of arguments that were logically invalid and loaded with ad-hominem. Indeed, they cheered Sirota because of his use of ad-hominem and insult in making his point.

As I mentioned above, Sirota began my offering a correlation between a higher minimum wage and higher employment.

Logicians have long recognized that a statistical correlation does not imply causation. My wife feeds our cat about 1 hour before I leave for work each morning. Yet, it would be a mistake to infer from this that my wife feeding my cat causes me to go to work. Making a causal inference out of a statistical correlation commits a logical fallacy that logicians know by the phrase cum hoc ergo proctor hoc.

In order to make a causal claim, Sirota needs not only a theory, but an explanation that links cause to effect. Once we have an explanation, we can examine the further implications of that explanation. Then, we can test that explanation by looking at those further implications.

In this case, Sirota’s explanation is that, "…you put money in the pockets of people who will spend it and that spurs the economy."

Stossel then tests this explanation by looking at its implications. Rephrasing Stossel's argument, he suggests, "If this relationship between raising the minimum wage and increasing jobs actually exists, we would expect an even larger effect if we raise the minimum wage to $20 or $40 per hour. However, we cannot reasonably expect such an effect. Therefore, the causal relationship you suggest does not exist."

To respond to this objection, Sirota either needs to add complexities to his theory, the same way that the followers of Ptolomy had to add epicycles upon epicycles to try to explain how the Earth could be the center of the universe. If Sirota fails this challenge, Stossel would be justified in claiming that Sirota has reported a correlation without causation.

My main point here is that Sirota’s claim that Stossel was “changing the subject:” is flat-out wrong. Even if Stossel’s argument does not work in the end, his response was not ‘changing the subject’. Sirota had an obligation to respond to this objection in an intellectually responsible way. Not only did he fail in this obligation, he compounded his failure with a coating of insults and ad-hominem.

A particularly obnixious implication of Sirota's insults and ad-hominem is that he apparently thinks that anybody who would question the effects of the minimum wage deserves this treatment. He cannot grasp the idea of somebody opposing the minimum wage out of a sincere desire to protect certain workers from economic catastrophy. This is another black mark on Sirota's moral character.

[Digression: Even if an increased minimum wage does correspond with an overall increase in employment, this would still not settle the question. Economic theory suggests that a higher minimum wage will draw workers into the job market who would have otherwise stayed out, such as students, children of middle- and upper-income households, and middle-income workers seeking supplemental income. These people who have options (thus, their earlier decision not to pursue these jobs) will drive others who have no other options out of the job market. Overall employment may go up, but the “wrong people” are getting the jobs and benefiting from the higher wage. In addition, a higher minimum wage lowers the marginal benefit of getting an education, which lowers the incentive people have to complete high school and acquire a college degree.]

Of course, Crooks and Liars decided that Sirota was the hero, and Stossel the villain. It appears quite obvious that they found a clip in which a liberal insulted a conservative, ad thought that this was sufficient to identify the clip as an item of merit that they posted on their web site. They showed no interest in the quality of the arguments, only in the quality of the insults.

This is just one “case study” of an instance where Crooks and Liars showed no genuine interest in honesty over deception. I, on the other hand, have no interest in directing readers to a site ran by people who do not care about the quality of the arguments that they present to their readers.

12 comments:

Do you know of any good introductions to economic theory for the "layperson"? A single book (or web site) that gives a broad overview of the most successful theories, and some history of ideas and internal disagreements in the field?

A little off-topic, yes, but I suspect at least some readers who click on this article might be interested in the same thing.

vjack Go to the main page for the site (click on the site title), you will find the list there. My guess is that you are reading this on the page for the individual article.

Anonymous I can tell you two tricks that I use when I want to get a basic understanding of any field of study.

Trick 1: I go to the local college bookstore, find out what texts they are using for their introductory classes, buy a copy, and read that. (I will wait until the students are well into the semester before I make a purchase, to make sure that there are enough copies.)

Trick 2: I record the telecourse material that shows up in the wee hours of the morning on my local PBS station. I have course material on geology, comparative religion, psychology, microeconomics, macroeconomics, and geography waiting for me on my DVR.

I like these methods because it presents you with material that is

(1) Is designed for the purpose of teaching the subject matter to beginning students.

(2) Is Recommended by an expert in the field whose job is to actually teach this stuff, and not some stranger you meet on the intranet.

(3) Has generally been tested in an academic environment and revised through several editions with feedback from professors, correcting mistakes and clarifying ambiguities.

I agree with your summary of the Sirota piece on Crooks and Liars; not really a shining example of good reasoning. On the other hand, Stossel is clearly being very disingenuous with his suggestion of raising the minimum wage to $40 per hour, twice the median income in the U.S. By analogy, suppose a conservative argued that lowering taxes actually increases federal revenue because it boosts the economy, and I suggested that we lower the rate down to 1% in the highest bracket. Intellectually honest? Hardly.

Conservatives, in fact, have an answer to the question, "Why not lower taxes to zero." It is called the Laffer Curve. It says that there is a point of maximum revenue when it comes to taxation. Above a particular point it is profitable to cut taxes - while below a particular point it is profitable to raise taxes.

If minimum wage defenders had a theory that identified an ultimate level for minimum wage, then they would have an aswer to this objection. However, instead of offering such a response, Sirota responded with insults and verbal assaults instead.

The Laffer curve is exactly the answer to Stossel's question. Applying it to tax revenue as a function of tax rate we cal oit the Laffer curve but marginal returns is nothing special as an economic concept. The same concept applies to any non-linear curve where an equilibrium point is reached and moving in either direction results in lower marignal returns. So Sirota may be correct up to the point of equilibrium at which point continuing to increase the wage hurts overall output.

When applying the concept to job creation as a function of minimum wage rate, we can call it the Alonzo curve if it makes you feel better.

The problem with applying a Laffer curve to any situation is knowing where on the curve you are at the moment, especially since the equilibrium point is not static and moves continually in repsonse to the infinite economic conditions. The studies of other states tends to show that we are on the left side of the equilibrium point, but it's impossible to say for sure. But there is enough circumstantial evidence to give it try and see. But as is the case with any economic solution, you better keep watching and measuring results. There is no one-shot answer to any of these issues that is right in all cases.

For instance the economic collapse we are in now just threw everybody's models out of whack and nobody knows where they stand at the moment.

It's nice that you memorized the Laffer curve concept, but by failing to realize that this concept is not unique to tax revenue, it's pretty clear your understanding of economics and calculus is pretty thin.

Your response did not address my point - which was that proper response to Stoffer in this case was not name calling, but to provide an economic argument that responded to his objection.

And the proper response from Crooks and Liars was not to cheer the name-calling as if this is the superior response, but to be on the side of providing reasoned objections where reasoned objections are to be had, and to conceed the point where reasoned objections are not to be had.

Point taken and I do agree that David's response was lame and I even agree that C&L can be very biased in presenting evidence, much like Media Matters. But the misuse of the Laffer curve annoys the heck out of me and you did state "If minimum wage defenders had a theory that identified an ultimate level for minimum wage, then they would have an aswer to this objection." as if there was no answer, not just that it wasn't offered. I may be projecting on you my annoyance at others who deliberately misuse the Laffer curve intentionally to argue for endless tax cuts.

Overall employment may go up, but the “wrong people” are getting the jobs and benefiting from the higher wage. In addition, a higher minimum wage lowers the marginal benefit of getting an education, which lowers the incentive people have to complete high school and acquire a college degree.

And David Sirota makes unsubstantiated claims in his argument? Back up either of these sophistries with some facts yourself. "Economic theory suggests" is not much of an argument. Where is the " peer-reviewed academic support" for those claims? Maybe you should cut them some slack since it's so easy to make the same mistake.

John "price gouging is a good thing" Stossel is a big pile of logical fallacies wrapped up in an asshole costume. Put him up against a Dean Baker and we'll see how little he really knows about economics.

You can cetainly tell your a "bean counter." Minimum wage is about people living at tolerable standard of living...not about job creation or economic stimulation. On that count you are all found lacking.As for the opinions of "economists"...one need only look around and and see the results of what this group of "giant brains" has created.Let's face it, when it comes to any predictive theory of economics we are better off casting bones or plucking a sheeps entrails.

Anyway....it is unreaonable to negate the entire website(C&L) on the basis of one (maybe?) unbalanced post.

About Me

When I was in high school, I decided that I wanted to leave the world better off than it would have been if I had not existed. This started a quest, through 12 years of college and on to today, to try to discover what a "better" world consists of. I have written a book describing that journey that you can find on my website. In this blog, I will keep track of the issues I have confronted since then.